KARACHI, Jul 06 (APP): State Bank of Pakistan (SBP), while extending implementation timelines, issued final instructions for implementation of International Financial Reporting Standard, IFRS-9 on Wednesday.
Final instructions on IFRS 9- a Global Standard set by the International Accounting Standards Board (IASB) – were issued for ensuring smooth and consistent implementation of the Standard in the banking industry, SBP spokesperson informed in a handout.
Under the revised timelines, banks having asset size of PKR 500 billion or above as per their Annual Financial Statements as of December 31, 2021, and for all the Development Finance Intuitions (DFIs), implementation date is set as January 1, 2023 while for all other banks and Microfinance Banks (MFBs), SBP has revised the implementation date of IFRS 9 as January 1, 2024.
The Standard lays out the accounting treatment of classification, measurement of financial instruments and impairment of financial assets. With the implementation of IFRS 9, the existing provisioning requirement, following incurred loss approach, will be replaced by Expected Credit Loss Provisions that will be based on expected losses on performing as well as non-performing portfolio.
SBP has been consulting with the banking industry since early 2018 for the adoption of IFRS 9 in Pakistan. Earlier, SBP had set a deadline of January 1, 2022 for the implementation of IFRS-9 by banks, which has now been revised on the request of banks that are facing challenges in the implementation of the new standard, the statement said.
This approach is forward looking and effectively measures the loan loss provisions based on credit risk models.